THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[05:00:00] CHRISTINE ROMANS, CNN ANCHOR: It will offer other snacks, like pretzels, cookies, and chips.

ALEX MARQUARDT, CNN ANCHOR: I was on an airline the other day and they asked anybody who came on board not to eat peanuts, because apparently, people who are next to people, they can also be affected if they have severe allergies.

ROMANS: Yes, luckily, I don't have that allergy, but I know people who do have that allergy. It's dangerous.

MARQUARDT: Part of the southwest DNA. Anyway, they're doing away with it.

EARLY START continues right now.

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ANNOUNCER: This is CNN breaking news.

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DONALD TRUMP, PRESIDENT OF THE UNITED STATES: But Germany is totally controlled by Russia.

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ROMANS: President Trump with a shocker before the NATO summit even gets underway. He says NATO countries are taking advantage of the U.S. by cutting side deals with Russia.

MARQUARDT: And markets pointing lower after the president escalates the trade war with China. Tariffs on another $200 billion of Chinese goods.

Good morning, and welcome to EARLY START. I'm Alex Marquardt, in for Dave Briggs.

ROMANS: Nice to see you this morning.

MARQUARDT: Great to be back with you.

ROMANS: I'm Christine Romans. It is Wednesday, July 11, it is 5:00 a.m. in the East, 11:00 a.m. in Brussels, where the NATO summit is under way today, and boy, is it under way. The president coming out swinging before the NATO summit officially starts this morning.

At a pre-summit breakfast, the president dressing down NATO Secretary- General Jens Stoltenberg, demanding increased defense spending by NATO allies, his wrath trained specifically on Germany. He called Germany a captive of Russia.

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TRUMP: But Germany is totally controlled by Russia because they were getting from 60 to 70 percent of their energy from Russia and a new pipeline. And you tell me if that's appropriate because I think it's not. And I think it's a very bad thing for NATO and I don't think it should have happened.

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MARQUARDT: The president's pregame jabs coming as no surprise to European leaders. They fear president Trump will follow through on threats to cut back on military protection for U.S. allies.

Earlier, the European council president had this stark warning for Mr. Trump.

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DONALD TUSK, PRESIDENT, EUROPEAN COUNCIL: America, appreciate your allies. After all, you don't have that many.

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ROMANS: The NATO summit is just ahead of the president's meeting with Vladimir Putin.

It's been a remarkable hour and a half this morning, quite frankly, Jeremy. The president-elected in this country to rock the boat. In Brussels, he is rocking the boat.

JEREMY DIAMOND, CNN POLITICS REPORTER: It has, and it's certainly been quite jarring, frankly to see the president come out swinging in this way. Very pointedly, pointing specifically to Germany, for example, one of the United States' closest allies, really an unsparing criticism of that country.

The president had already signaled before coming to Europe that he was going to come out swinging, and he certainly has this morning already, specifically with regards to Germany. He said that Germany is captive of Russia, criticizing the country for purchasing billions of dollars in natural gas and energy from Russia, arguing that they are beholden, essentially, to that country because of those payments, something that the president is kind of putting in contrast with Germany's requirements for some U.S. protection, NATO protection overall from Russian aggression in general.

And the president also calling on NATO allies to step up their defense spending immediately, not by 2024, as the United States and other allies had previously agreed to, but immediately. And this is, again, a point that the president has made repeatedly.

The NATO secretary general, Jens Stoltenberg, pushed back on some of the president's criticism. He said that indeed, NATO allies need to step up defense spending but said they already really have. And he emphasized the point that the U.S. and its NATO allies are stronger together than apart, despite whatever differences they may have.

The secretary-general emphasizing the strength of the alliance, something, frankly, that U.S. officials also emphasized ahead of the president's visit, but clearly, U.S. President Donald Trump seems more intent on talking about some of the differences in the alliance and criticizing other allies, as he prepares to come here to shake hands with many of those same allies at NATO headquarters.

ROMANS: All right. Jeremy Diamond, nice to see you. We'll talk to you in a moment.

Joining us this morning live from London, CNN chief international anchor, Christiane Amanpour.

Good morning, Christiane.

Certainly, I've never seen a pre-summit breakfast quite like, sets the tone for a president who is going to speak his mind to America's friends and allies.

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL ANCHOR: You know, Christine, it is unprecedented, and we should be under no illusion. This is not normal at all. This is not normal for the United States to be talking to its allies in this regard, remembering that the only time NATO's actual joint Article Five for defense was ever called was for the United States by NATO allies after 9/11.

But let's now call a spade a spade and talk about the facts and figures. The president is wrong about what he says about the pipeline and the so-called dependence on oil that he blames Germany for, but also on the sums of money.

[05:05:04] Of course, NATO is being asked and all the allies, to up their internal defense spending to 2 percent of GDP. And as the secretary-general says, in the last few years, they have all done that, collectively have risen about 5.2 percent. And there is an agreement to raise it to the 2 percent by 2024, that is what they're aiming for. So, that's the first thing.

Then, they are very concerned in Brussels that the president, by coming out so strong and sounding like a broken record on a deal that NATO already agrees to, which is their internal military spending, that the president is actually leaning towards, you know, threatening the alliance, rather than strengthening it. As you know, just before he landed, the Senate in the United States passed a bipartisan, overwhelming resolution, reaffirming its support for NATO.

Now, I asked in an exclusive interview the German defense minister to respond to the president's complaints about this Russia pipeline. It is unprecedented language for the president of the United States to say that Germany, its key European ally, is a captive to Russia and controlled by Russia, and this is what the German defense secretary said to me about that pipeline.

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URSULA VON DER LEYEN, GERMAN MINISTER OF DEFENSE: First of all, this is a pipeline, this economic project started I think back in 2002 or '03, so way before Russia changed its behavior in 2014. We have a very diverse mix of energy supply, so the president hasn't to be worried that there's any kind of dependency. On the contrary, if there is one person who has been dealing all the time with President Putin very hard on the issues of the Ukraine and the hybrid war in the Ukraine, it was Chancellor Merkel.

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AMANPOUR: And those are the facts. Angela Merkel was the European leader who led the pushback to Russia after Russia annexed Ukraine in 2014.

And it was only after that that the whole security -- so, they say there's absolutely no comparison and no connection between their business deal that was done 15 years ago on this pipeline and what President Trump is accusing them of today. On the other issue of the NATO spending, it was only after 2014 that Europeans, who believed that Europe was at peace after the fall of the Soviet Union, when Russia started to throw its weight around, started to annex other countries, that's when NATO said we must all raise our defense spending and in the next ten years get it to 2 percent, and that's what they're on track to do.

One hundred percent of NATO countries are increasing their defense spending. Those are the facts.

Now, I asked the U.S. ambassador to NATO, Kay Bailey Hutchison, a former U.S. senator from Texas, wasn't all this discord music to President Putin's ears, who is looking for any which way to drive a wedge and to disrupt the Western alliance, and she agreed that that was so. Listen to what she told me yesterday.

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KAY BAILEY HUTCHISON, U.S. AMBASSADOR TO NATO: I think the discord is music to Putin's ears, but I do think that coming from this summit, which is allied, is strong, and is going to increase our deterrent capabilities, that is going to put President Trump in a very strong position with President Putin, and I think he will be tough with President Putin. (END VIDEO CLIP)

AMANPOUR: So, that is what the American officials are trying to say about President Trump's strategy. They call it a strategy showing strength. But mostly strength against the allies as it's being viewed right now.

They hope, though, that strength translates into a meeting with President Putin. But the thing they are really hoping for is that this NATO summit does not descend into the debacle that the G7 summit turned into in Canada, where President Trump withdrew America's signature from the final communique and again hurled insults at key, longtime allies, including Canada itself.

MARQUARDT: Christiane, as we --

AMANPOUR: Christine, Alex?

MARQUARDT: -- as we've been speaking, we've seen more delegations arriving in Brussels, including Canadian Prime Minister Justin Trudeau. On top of this language -- where does this language go? What are the potential consequences of this?

I mean, is a potential consequence an end to this western alliance?

AMANPOUR: Look, they're very concerned in Europe and amongst the western alliance. Remember, Turkey is also part of NATO.

What they tell us is that on the ground, the military alliance is working, is holding, the work is going on between the United States and its partners on the ground. But they're very, very concerned about the tone. And, you know, they're very concerned that this alliance, which was formed and signed into being by the United States -- President harry Truman 70 years ago -- to defend the Western alliance and to uphold the values that the Western -- the democracies share, is now under threat.

[05:10:17] Not just the alliance under threat by President Trump's rhetoric, but the whole idea of this joint alliance and its objectives is under threat, not by the Soviet Union, not by Vladimir Putin, but by President Trump. So, this is incredibly important for them that this summit ends in a way that shows unity, particularly since this summit comes right before President Trump goes to meet with President Putin about whom he continues to speak more gently than he does about the allies.

So, they're very, very concerned about that at this moment.

MARQUARDT: Yes, refusing to call him a foe.

Well, drama right out of the gate. Chief international anchor Christiane Amanpour there in London, thank you very much.

ROMANS: Thanks, Christiane.

AMANPOUR: And then there's this, the U.S. unveiling new tariffs on China, ramping up a trade war with Beijing, preparing additional $200 billion in tariffs on Chinese goods. China calls this unacceptable, vowing to respond with necessary countermeasures, didn't provide specific details. This is all shaking global stocks.

Asia and Europe falling overnight. Dow futures down just about more than 200 points. This new round of tariffs makes good on a threat by the president. Last week, the U.S. slapped tariffs on $34 billion of Chinese goods, that was punishment for years of China stealing U.S. trade secrets.

Trump then threatened to hit another $200 billion, if China retaliated to those $34 billion. China did retaliate to the $34 billion, so look, these new tariffs are going to hit thousands of products, including consumer goods, handbags, refrigerators, furniture, apparel, mattresses. So far, the U.S. avoided targeting things like that, that most Americans buy, in the first round of tariffs. But the current dollar scale of the threats from the U.S. makes that nearly impossible.

This announcement comes as Trump meets with NATO allies, many of whom he accuses of unfair trade practices. He tweeted yesterday that the U.S. has a $151 billion trade deficit with Europe, but they want us to happily defend them through NATO and nicely pay for it. The U.S. already hit the E.U. with tariffs on foreign steel and the E.U. retaliated. Now, the U.S. is threatening new tariffs on European cars.

MARQUARDT: And President Trump with those tariffs threatening the success of the stock market, which he's so proud of as well.

ROMANS: Up 30 percent since the election but has pretty much stalled here more recently because of those trade fears.

MARQUARDT: It's very fragile because of that.

All right. Well, this father got to hold his son again, which is something that not every parent was so lucky to do on deadline day. Now the health secretary says that caring for immigrant kids on the border is an act of charity. That's next.

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[05:16:51] ROMANS: The Trump administration last night officially missed the deadline to reunify 102 children separated from their parents at the U.S. border. As of Tuesday evening, just 38 families have been reunited. The judge in the case anticipated it would reach 63 by the end of the day. It is unclear if even that bar was reached. The government says some parents could not be found, had been deported, had criminal histories or other issues.

MARQUARDT: That deadline to reunify more than 2,000 children still in government custody is July 26th. That's just over two weeks away. We asked Health and Human Services Secretary Alex Azar why his agency won't allow media cameras into those facilities that are housing the kids. Here's what he had to say.

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ALEX AZAR, SECRETARY, HEALTH AND HUMAN SERVICES: It is one of the great acts of American generosity and charity, what we are doing for these unaccompanied kids who are smuggled into our country or come across illegally.

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ROMANS: An act of charity.

Emotional moments for families that were reunited yesterday. Ever Reyes Mejia was reunited with his 3-year-old little boy in Michigan. Smile on that kid's face is just priceless. They had not been together since April.

Also yesterday, Walter Jimenez Melendez reunited with his 4-year-old son, Jeremy, in Texas. They were separated for 48 days.

MARQUARDT: Smiles, but after so much trauma.

All right. Well, the Trump administration again slashing Obamacare funding for the coming year. The Centers for Medicare and Medicaid Services will provide only $10 million for the so-called navigator program for open enrollment in November. That's down from $36 million last year and $63 million the year before, 2016.

Navigator programs helps consumers, small businesses, and employees find coverage on the Obamacare marketplace. The Trump administration claims that navigators are not effective. However, consumer groups disagree. They're concerned that Obamacare shoppers could easily become confused.

And breaking overnight, a newborn baby was killed as a tornado ripped through North Dakota. The 7-day-old boy died at the hospital after a powerful twister with wind speeds up to 127 miles per hour struck an RV park in Watford city. Authorities say 122 structures have been completely destroyed with hundreds more damaged.

ROMANS: A Montana police officer says finding an abandoned 5-month- old baby buried in the woods brought out his paternal instincts. The child was alone for at least nine hours covered by a pile of sticks and dirt and debris when Deputy Ross Jessop found him.

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ROSS JESSOP, MISOULA COUNTY SHERIFF'S DUTY: My fatherly instincts came in. I abandoned any police training or any chance of saving evidence there. I didn't care. I scooped up a baby, made sure he was breathing. He had a sparkle in his eye. Warmed him up, gave him a couple of kisses and just held him.

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ROMANS: Francis Carlton Crowley is accused of abandoning the baby. He is being held on $50,000 bail, faces criminal endangerment charges. MARQUARDT: All right. Well, the recovery is just beginning for the

12 boys and their soccer coach freed from that flooded cave in Thailand. Their condition and what challenges they face, live from Thailand, next.

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[05:24:26] MARQUARDT: Welcome back to EARLY START.

All 12 boys and their soccer coach are out of that cave in Thailand, trapped after 18 days trapped by floodwater under ground. Now concerns center on the physical and emotional toll of their ordeal.

CNN's Ivan Watson has been on the ground. He has the latest from Chiang Rai, Thailand.

So, Ivan, what's next for these boys and their coach?

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, the doctors say they're slowly reintroducing them to solid food. Recall, that these kids hadn't eaten anything solid for more than two weeks while they were trapped under ground. They are phasing them out from wearing sunglasses to protect their eyes after being in the dark for all that time.

[05:25:04] And their parents are slowly getting closer to them as their quarantine shrinks, as the doctors get more confident about their health and their immune systems. But overall, the doctors say these boys look pretty good, considering the ordeal that they just escaped from.

The divers who were under ground with them for more than a week, they're also recovering and in pretty positive condition right now. I've been in touch with one of the international divers, and there were Australians, there were American military drivers, there were British, there were Chinese, all a part of this, led by the Thai, of course, the Thai navy SEALs. And one of them said that after many missions, hours in the tunnels, that his hands and feet were pretty beaten up and need some medical care.

The Thai navy SEALs have put out a message of condolence to an Australian diver, a doctor named Richard Harris, who played an integral role in this remarkable rescue, Alex, who, sadly, lost his father last night, even as he was playing this critical role in saving 12 boys and their soccer coach from dying underground -- Alex.

MARQUARDT: And of course, Ivan, there was that former Thai navy SEAL who lost his life after losing air in that cave. But aside from that, it was an extraordinary rescue mission that really went as well as anyone could have hoped.

Ivan Watson in Chiang Rai, Thailand, thanks very much.

ROMANS: You love to see that story. I want those boys to flourish. I can't wait to see pictures of them without the glasses and without, you know, the stretchers and just the boys are back.

MARQUARDT: Back with their parents.

ROMANS: Absolutely.

All right, step it up immediately. A tense exchange with NATO's secretary-general. President Trump claims Germany is a captive of Russia.